Bevscape Business

With the approval of the high-end, organic player Sweet Leaf Tea Co. to purchase the mainstream tea company Tradewinds, the private equity group Catterton Partners is taking steps to insure a large payout when the time comes for Nestle to finally buy out Sweet Leaf Tea from its investment partners.

Coming hot on the heels of the departure of founder and CEO Clayton Christopher, the Tradewinds acquisition allows Sweet Leaf to add positive sales numbers to its bottom line as it attempts to reach revenue goals that will ultimately lead to a large payoff for investors through a Nestle purchase. The Tradewinds brand is a big, profitable player in Midwest U.S. mainstream channels, and its positive cash flow will also help decrease the debt load for Sweet Leaf as the upstart organic tea company battles to broaden its reach via more mainstream supermarket and national DSD accounts.

With Tradewinds’ own strengths factored in – it sells to mainstream grocery, Wal-Mart, Trader Joe’s, and other large accounts – the acquisition allows Sweet Leaf – which has fought to escape its original natural channel distribution – to conduct a “dual-brand strategy,” according to a source close to the deal.

Investment Update

The FRS Company announced that it has received $23.1 million in its latest financing round led by Oak Investment Partners, LLC, an early investor in The FRS Company. The additional financing allows the company to expand its sales infrastructure by hiring beverage industry veterans and exploring distribution opportunities throughout the U.S. and internationally. The company will also continue to support its marketing efforts, such as the recently launched national television advertising campaigns featuring seven-time Tour de France champion Lance Armstrong and four-time NBA championship player Derek Fisher.

Adina for Life, Inc. announced the completion of a $14 million round of equity financing lead by CIC Partners. The Dallas, TX-based investment group includes former PepsiCo Chairman and CEO Roger Enrico, and Michael Rawlings, former President at Pizza Hut, Inc. Other investor partners include Sherbrooke Capital, Pacific Community Ventures, Good Capital, and Seraph Capital–all investors in previous rounds, as well as many of Adina’s distributor partners. Adina for Life said this newest round of investment capital will bolster national distribution of Adina Holistics.

Diet Grows as CSD Decline Slows

Sales of carbonated soft drinks declined in 2009, but at a lower rate than they have been recently, according to new data from Beverage Digest.

BD showed that North American CSD volumes declined by about 9.4 billion cases, or 2.1 percent, compared to a nearly 3 percent drop in 2008.

Pepsi Beverages Company chief executive Eric Foss predicted that CSD sales will return to low single digit growth in 2011, but consumer preferences within the category may be shifting. Dr Pepper Snapple Group grew its volume by 4.8 percent, according to BD, while PepsiCo and the Coca-Cola Co. lost 5 percent and 3.9 percent, respectively.

Additionally, only two of the top ten CSD brands – Diet Mtn Dew and Diet Dr Pepper – increased their volumes. Fast-growing Coke Zero sold 116 million cases, approaching the 167 million sold by Diet Dr. Pepper, and BD reports that diet beverages now account for 30 percent of the CSD category.

The overall liquid refreshment beverages market has also slipped, with Coke losing 3.1 percent of its volume and PepsiCo down by 7.5 percent. DPSG, however, grew total LRB volumes by 3.3 percent on the strength of its CSD sales.